International Financial Reporting Standards Foundation

ANNUAL REPORT

For the year ended

31 December 2010

Report of the independent auditors

We have audited the financial statements of the International Financial Reporting Standards Foundation for the year ended 31 December 2010 which comprise the
statement of comprehensive income, the statement of financial position, the statement of cash flows and the related notes. These financial statements have been prepared under the
accounting policies set out therein.

This report is made solely to the Foundation’s Trustees, as a body, in accordance with our engagement letter to you and for no other purpose. Our audit work has been undertaken so that
we might state to the Foundation’s Trustees those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Foundation and the Foundation’s Trustees as a body, for our audit work, for this report, or for the opinions we have
formed.

Respective responsibilities of Trustees and auditors

The Trustees are responsible for the preparation of the financial statements in accordance with applicable law, the Foundation’s constitution and International Financial Reporting
Standards. Our responsibility is to audit and express an opinion on the financial statements in accordance with the Foundation’s constitution and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Opinion on financial statements

give a true and fair view of the state of the Foundation’s affairs as at 31 December 2010 and of its comprehensive income for the year then ended; and

have been properly prepared in accordance with International Financial Reporting Standards.

BDO LLP

Chartered Accountants, London

31 March 2011

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Statement of comprehensive income

Year ended 31 December

2010

2009

Notes

£’000

£’000

Income

Standard-setting and related activities

Contributions

3

16,640

16,584

Interest income

271

377

Other income

58

34

16,969

16,995

Publications and related activities

Revenue

4(a)

5,804

5,654

22,773

22,649

Expenses

Standard-setting and related activities

Salaries, wages and benefits

5

( 15,089)

( 14,000)

Trustees’ fees

6

( 639)

( 506)

Cost of meetings, associated travel and accommodation

7

( 2,629)

( 2,441)

Accommodation

8(a)

( 1,319)

( 1,285)

Other costs

9

( 1,221)

( 1,464)

( 20,897)

( 19,696)

Publications and related activities

Direct cost of publications and related activities

4(b)

( 3,246)

( 3,260)

( 24,143)

( 22,956)

Loss before fair value changes and exchange losses

( 1,370)

( 307)

Changes in fair value of financial instruments

10(d)

( 4)

2,966

Exchange losses

( 637)

( 2,072)

(Loss) profit before tax

( 2,011)

587

Income tax (expense) credit

11

( 13)

60

Comprehensive (loss) income for the year

12

( 2,024)

647

The notes on pages 6 to 18 form part of these financial statements.

Statement of financial position

2010

2009

As at 31 December

Notes

£’000

£’000

Assets

Current assets

Cash and cash equivalents

10(a)

2,360

3,123

Accrued interest receivable on bonds

162

168

Contributions receivable

3

1,150

1,068

Trade and other receivables

10(c)

934

910

Prepaid expenses

585

567

Inventories

13

293

138

Bonds

10(b)

1,199

1,528

6,683

7,502

Non-current assets

Bonds

10(b)

4,784

6,055

Leasehold improvements, furniture and equipment

8(b)

539

593

5,323

6,648

Total assets

12,006

14,150

Liabilities

Current liabilities

Trade and other payables

948

665

Accrued expenses

1,260

1,320

Contributions received in advance

3

-

49

Rent incentive

82

82

Publications revenue received in advance

651

809

Forward currency contracts at fair value

10(d)

241

355

3,182

3,280

Non-current liabilities

Forward currency contracts at fair value

10(d)

154

93

Reinstatement provision

8(c)

413

413

Rent incentive

550

633

1,117

1,139

Total liabilities

4,299

4,419

Net assets

12

7,707

9,731

The notes on pages 6 to 18 form part of these financial statements.

The financial statements on pages 3 to 18 were approved by the Trustees of the IFRS Foundation on 31 March 2011 and authorised for issue on 31 March 2011.

Tsuguoki Fujinuma Acting co-chair and vice chair of the Trustees

Robert Glauber Acting co-chair and vice chair of the Trustees

Statement of cash flows

2010

2009

Year ended 31 December

Notes

£’000

£’000

£’000

£’000

Operating activities

Cash received

Contributions

16,509

15,673

Interest

317

384

Publications and related activities

5,524

5,293

Income taxes received (paid)

46

( 45)

Other receipts

53

36

Cash paid

Salaries, wages and benefits

( 15,111)

( 14,001)

Publications direct costs

( 3,412)

( 3,239)

Trustees’ fees

( 494)

( 519)

Foreign exchange settlements

( 639)

( 2,075)

Other expenses

( 4,860)

( 4,802)

Net cash from operating activities

( 2,067)

( 3,295)

Investing activities

Purchase of bonds

-

( 1,380)

Matured bonds receipts

1,504

1,335

Purchase of leasehold improvements, furniture and equipment

( 202)

( 188)

Net cash increases (decreases) from investing activities

1,302

( 233)

Effects of exchange rate changes on cash and cash equivalents

2

4

Net increase (decrease) in cash and cash equivalents

( 763)

( 3,524)

Cash and cash equivalents at the beginning of the period

3,123

6,647

Cash and cash equivalents at the end of the period

10(a)

2,360

3,123

The notes on pages 6 to 18 form part of these financial statements.

Notes to the financial statements

1. Legal form, objectives and restructuring

Incorporated in the State of Delaware, USA, on 6 February
2001, the International Financial Reporting
Standards Foundation (IFRS Foundation) is a not-for-profit
charitable organisation with its primary operations based in London. During the year, the organisation changed its name from the International Accounting Standards Committee Foundation.

The objectives of the IFRS Foundation are:

(a) to develop, in the public interest, a single set of high quality, understandable, enforceable and globally accepted financial reporting standards based upon clearly
articulated principles. These standards should require high quality, transparent and comparable information in financial statements and other financial reporting to help
investors, other participants in the world’s capital markets and other users of financial information make economic decisions.

(b) to promote the use and rigorous application of those standards.

(c) in fulfilling the objectives associated with (a) and (b) to take account of, as appropriate, the needs of a range of sizes and types of entities in diverse economic
settings.

(d) to promote and facilitate adoption of International Financial Reporting Standards (IFRSs), being the standards and interpretations issued by the International Accounting
Standards Board (IASB), though the convergence of national accounting standards and IFRSs.

The governance of the IFRS Foundation rests primarily with its Trustees, who provide oversight of the IASB and its related bodies, the IFRS Interpretations Committee and the IFRS
Advisory Council.

As a result of a constitutional change agreed in January 2009, a Monitoring Board comprised of public capital market authorities provides a formal link between the Trustees and
public authorities.

In addition to their general oversight functions, the Trustees appoint the members of the IASB and related bodies, and are responsible for the financial and legal arrangements of the
organisation. The IASB has the responsibility for setting accounting standards in accordance with its mandate and the due process set out in the IFRS Foundation’s
Constitution and the IASB’s Due Process Handbook.

2. Accounting Policies

(a) Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards, on the historical cost basis, as modified by the revaluation of
financial assets and liabilities, including derivative financial instruments, at fair value through profit or loss. The policies have been consistently applied to all years
presented, unless otherwise stated.

For the purposes of organising the financial information the IFRS Foundation has categorised income and expenses into two categories. Standard–setting and related activities
includes all activities associated with standard–setting and support functions required to achieve the organisation’s objectives. Publications and related activities include
information related to the sales of print and electronic IFRS materials, educational activities, and the development and maintenance of an IFRS eXtensible Business Reporting
Language (XBRL) taxonomy.

(b) Contributions

Contributions are recognised as revenue in the year designated by the contributor. Provided they can be reliably measured, donated services that would normally have otherwise
been purchased are recognised in the financial statements based on their estimated value. Where donated services would not be purchased or cannot be measured with sufficient
reliability, and are not recognised in the financial statements but disclosure of the nature and scale of the services received would help the user gain a better understanding of
activities, disclosures are in the accompanying information.

(c) Publications and related revenue

Subscriptions to the IFRS Foundation’s comprehensive package and eIFRS products are recognised as revenue on a time-apportioned basis over the period covered by the
subscriptions. Royalties are recognised as revenue on an accrual basis. Publications direct cost of sales is comprised of printing, salaries, promotion, computer and various
related overhead costs.

(d) Inventories

Inventories of current publications are valued at the lower of net realisable value and the cost of printing the publications, on a first-in-first-out basis. Inventories that
have been superseded by new editions are written off.

(e) Depreciation

Leasehold improvements and furniture and equipment are initially measured at cost, and depreciated on a straight-line basis (in the case of leasehold improvements over the period
of the lease). All other assets are depreciated over 5 years, except computer equipment, which is depreciated over 3 years.

(f) Foreign currency transactions

The IFRS Foundation’s presentational and functional currency is sterling. Transactions denominated in currencies other than sterling are recorded at the exchange rate at the
date of the transaction. Differences in exchange rates are recognised in the Statement of Comprehensive Income. Monetary assets and liabilities are translated into sterling at
the exchange rate at the end of the reporting period.

(g) Operating leases - office accommodation

Lease payments for office accommodation are recognised as an expense on a straight-line basis over the non-cancellable term of the lease. Leases in which a significant portion
of the risks and rewards of ownership are retained by the lessor are classified as operating leases. The aggregate benefit of lease incentives is recognised as a reduction of the
rental expense over the lease term on a straight-line basis.

(h) Financial assets

Regular purchases and sales of financial assets are recognised on the trade date, the date on which the IFRS Foundation is committed to purchase or sell the asset. Investments
are recognised initially at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when
the rights to receive cash flows from the investments have expired or have been transferred and the IFRS Foundation has transferred substantially all risks and rewards of
ownership.

The IFRS Foundation classifies financial assets as subsequently measured at either amortised cost or fair value based on its business model for managing the financial assets and
the contractual cash flow characteristics of the financial asset. All financial assets, except for bonds and derivatives, are carried at amortised cost as the objective is to
hold these assets in order to collect contractual cash flows and those cash flows are solely principal and interest. Investments in bonds are classified as subsequently measured
at fair value through profit or loss, and the corresponding gains or losses are included within profit (loss) before tax. Bond holdings are discussed more fully in note 10.

(i) Derivative financial assets and liabilities

The IFRS Foundation uses contributions, primarily in US dollars and euro, to fund a portion of sterling obligations arising from its activities. In accordance with its financial
risk management policy, the IFRS Foundation does not hold or issue derivative financial instruments for trading purposes; the forward foreign currency hedges are entered into to
provide certainty regarding funding to protect against currency fluctuation on future cash flows that are designated in US dollars and euro. Derivative financial instruments are
recognised and subsequently measured at fair value. The corresponding gains or losses are included within profit (loss) before tax.

(j) Provisions and contingencies

Provisions are recognised when the following three conditions are met—the IFRS Foundation has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount of the provision represents the best estimate of the expenditure required to settle the obligation at the end of the reporting period. Provisions are measured at the
present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the obligation. The increase in the provision due to the passage of time is recognised as interest expense.

(k) Critical accounting estimates and judgements

The IFRS Foundation makes estimates and assumptions regarding the future. In the future, actual experience may differ from those estimates and assumptions. The Trustees
consider there are none that are material to the preparation of the financial statements.

(l) New standards and interpretations issued

The financial statements have been drawn up on the basis of accounting standards, interpretations and amendments effective at the beginning of the accounting period on 1 January
2010, except for that explained below. The IFRS Foundation has concluded that there are no other relevant standards or interpretations in issue not yet adopted.

Standard adopted early

IFRS 9 Financial Instruments was adopted in 2009. It was issued in November 2009 and is required to be applied after 1 January 2013. The presentation of the IFRS
Foundation’s financial statements has not significantly changed as a result of the early adoption of the new standard as it did not change the measurement of any assets.

(m) Reclassification of items in the financial statements

In order to conform to the current year’s presentation in the financial statements, the following comparative amounts were reclassified. The changes in presentation are to
improve the information provided.

Per Diem expenses for IASB members are included in Salaries, Wages and Benefits in note 5. The prior year amount of £ 391,000 was included in Cost of Meetings, Associated Travel and Accommodation. This change
was made because per diem expense payments for IASB members were eliminated during the year and are now paid as an element of IASB members’ remuneration as disclosed in note
5.

Marketing and Promotion expenses are included in Other Costs in note 9. The prior year amount of £ 3,000 has
been reclassified from the line item Other to External relations.

3. Contributions

Since 2006, the Trustees have sought to establish national financing regimes, proportionate to a country’s relative GDP, that establish a levy on companies or provide an element of
publicly supported financing. Currently, the majority of the Foundation’s finances is based on such regimes, and this approach has been particularly successful in Asia-Oceania and
Europe. However, voluntary systems remain in place in some jurisdictions; some countries contribute less than their fair share or not at all. The Trustees are actively working to
achieve further contributions.

Through the national and other financing arrangements, the IFRS Foundation received funds of £ 16,640,000 in contributions (2009: £ 16,584,000).

There were no contributions received before 31 December 2010 (2009: £ 49,000), which were specifically designated by the contributors for use by the IFRS Foundation in
subsequent years. Contributions received or confirmed after 31 December 2010, amounting to a total of £ 1,150,000 (2009: £ 1,068,000), specifically designated by
the contributors for use by the IFRS Foundation in 2010, were recognised as revenues at the end of 2010 and included as contributions receivable.

Using the IFRS Foundation’s website, the Trustees are informing interested parties of their progress on establishing broad-based funding regimes throughout the world.

4. Publications and related activities

(a) Publications and related revenue

2010

2009

£’000

£’000

Sales of subscriptions and publications

3,641

3,751

Royalties and permission fees

1,862

1,640

Other related activities

301

263

Total

5,804

5,654

(b) Publications and related costs

2010

2009

£’000

£’000

Staff/employee related costs

1,569

1,527

Cost of goods sold

514

475

Depreciation

28

26

Other costs

1,135

1,232

Total

3,246

3,260

5. Salaries, wages and benefits

The IFRS Foundation had an average of 119 employees (including IASB members and interns) during 2010 (2009: 114).

2010

2009

£’000

£’000

£’000

£’000

Staff costs, including IASB members’ salaries and other costs

14,360

13,245

Contributions to defined contribution pension plans

693

652

Other costs

36

103

15,089

14,000

Staff costs included in publications direct expenses (see note 4)

Salaries and other costs

1,463

1,437

Contributions to defined contribution pension plans

91

84

Other costs

15

6

1,569

1,527

Total

16,658

15,527

The Trustees’ Human Capital Committee is responsible for reviewing, benchmarking and making recommendations on salary and benefit levels. These recommendations are reviewed and
approved annually by the Trustees as a whole. As a number of the IASB members work outside the United Kingdom and therefore carry different employment tax burdens, the Trustees
agree upon an annual remuneration budget for each of the IASB members inclusive of all employer contributions for tax and benefits. In 2010, the total cost for 14.8 full-time equivalents
(2009: 14.0
full-time equivalents) IASB members, amounted to £ 6,759,000 (2009: £ 6,269,000). In July 2010, effective for October 2010, the Trustees approved the following
remuneration budgets: £ 553,350 (includes per diem allowance) per year for the IASB Chair (2009: £ 493,990, excludes per diem allowance), £ 457,950 (includes
per diem allowance) per year for full-time members (2009: £ 401,370, excludes per diem allowance).

Trustees’ fees

The Trustees are remunerated by annual and meeting fees and are reimbursed for the expenses of their travel on IFRS Foundation business; there were 21 Trustees in 2010 (2009:
22). In 2010
the fee for the Chair of the Trustees was £ 137,500 (2009: £ 75,000). In 2010, the Chair waived fees of £ 37,500 (2009: £ 75,000) and it was included as a
contribution. The annual fee for the other Trustees was £ 12,500 (2009: £ 12,500). Trustees received an attendance fee of £ 1,000 (2009: £ 1,000) for
each formal meeting.

7. Cost of meetings, associated travel and accommodation

2010

2009

Meeting type

£’000

£’000

IASB

407

544

Trustees

536

359

IFRS Interpretations Committee and IFRS Advisory Council

401

314

Financial Crisis Advisory Group

13

218

Other advisory meetings

544

446

Travel for other consultation and liaison

728

560

Total

2,629

2,441

8. Accommodation and other assets

(a) Accommodation expenses

2010

2009

£’000

£’000

Rent

696

700

Service charges

205

205

Rates, insurance and energy

439

438

Depreciation

185

150

Other

33

29

1,558

1,522

Less amounts included in publications costs

( 239)

( 237)

Total

1,319

1,285

(b) Leasehold improvements, furniture and equipment

2010

Leasehold improvements

Furniture,

equipment

2010

Total

£’000

£’000

£’000

Cost

At 1 January 2010

1,028

1,073

2,101

Additions

-

132

132

Disposals/retirements

-

( 62)

( 62)

At 31 December 2010

1,028

1,143

2,171

Accumulated Depreciation

At 1 January 2010

742

766

1,508

Charge for the year

35

151

186

Disposals/retirements

-

( 62)

( 62)

At 31 December 2010

777

855

1,632

Net carrying amount at 31 december 2010

251

288

539

2009

Leasehold improvements

Furniture,

equipment

2009

Total

£’000

£’000

£’000

Cost

At 1 January 2009

1,028

815

1,843

Additions

-

258

258

At 31 December 2009

1,028

1,073

2,101

Accumulated Depreciation

At 1 January 2009

708

651

1,359

Charge for the year

34

115

149

At 31 December 2009

742

766

1,508

Net carrying amount at 31 December 2009

286

307

593

At the reporting date the IFRS Foundation had no capital commitments (2009: £nil).

(c) Reinstatement provision

The IFRS Foundation has made a provision for reinstatement to cover the cost of reinstating the building when the lease expires in September 2018. The estimated amount and timing
of any outflow are subject to options to extend the lease. The corresponding property asset is amortised over the period of the lease.

2010

2009

£’000

£’000

Balance at 1 January

413

413

Provision made in year

-

-

Balance at 31 December

413

413

(d) Lease commitments

Lease commitments relate to operating leases for office space with lease terms expiring in September 2018, and with options to extend for a further 10 years. All operating lease
contracts contain market review clauses. Payments on the leases, excluding service charges and property rates, are as follows:

2010

2009

Payments

£’000

£’000

Within one year

778

778

In two to five years

3,113

3,113

More than five years

2,138

2,916

Total

6,029

6,807

Since 2001 the IFRS Foundation has rented office space at 610 Fifth Avenue, New York, NY, USA. The only obligation incurred in this regard relates to payment of ongoing rent and a
provision of 90 days’ notice of termination.

9. Other costs

2010

2009

£’000

£’000

Communication & Technology

445

499

Audit, legal and taxation fees

131

138

External relations

209

255

Recruitment

193

346

Others

243

226

Total

1,221

1,464

10. Financial instruments

The IFRS Foundation receives contributions in a number of currencies but its expenditures are largely sterling based. This exposes the organisation to financial risks. The IFRS
Foundation also faces risks associated with its use of financial instruments. This note describes the organisation’s objectives, policies and processes for managing those risks and
the methods used to measure them.

There have been no substantive changes in the organisation’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods
used to measure them from previous periods.

Principal financial instruments

The principal financial instruments used by the IFRS Foundation, from which financial instrument risk arises, are as follows:

Bonds

Derivative instruments - forward currency contracts

Trade and other receivables

Cash and cash equivalents

Trade and other payables.

(a) Cash and cash equivalents

Liquidity risk associated with cash and bond holdings

The IFRS Foundation manages its working capital to ensure sufficient cash resources are maintained to meet short-term liabilities. The IFRS Foundation has no bank borrowings.

Cash holdings: Management seeks to keep an amount in cash equal to or exceeding the upcoming quarter’s expenditure. Cash is held either on current or on short-term
deposits at floating rates of interest determined by the relevant bank’s prevailing base rate. Part of the cash at bank is held in euro and US dollar accounts. Cash at bank to pay
for general operations in London is held by Barclays Bank PLC, London. A US dollar account, used to pay most US dollar expenses, is held by Barclays Bank PLC in New York. Other
deposits and balances required from time to time to cover hedging obligations and for investment purposes are held in accounts with Barclays Bank (Suisse) S.A in Geneva. All
decisions regarding the Geneva accounts are managed by the Trustees of the IFRS Foundation.

Interest income on cash deposits amounted to £ 13,000 (2009: £ 56,000). Due to the relatively short durations and levels of cash deposits and returns, interest
rate risk is not considered significant.

Effective interest rates

2010

2009

2010

2009

£’000

£’000

%

%

Cash and bank deposits due after 15 days in Geneva

Bank sterling deposits due within 45 days

-

2,145

-

0.45

Cash and bank deposits due on demand

Sterling

1,797

358

0.05

0.05

Euro

84

28

-

-

US dollar

479

592

-

-

Total

2,360

3,123

(b) Bonds

Bond holdings: The Trustees have invested surplus funds of the IFRS Foundation in sterling-denominated, fixed rate notes of the UK government and international
organisations with an AAA rating. Funds are divided into relatively equal sums with maturities in each of the next five years.

The IFRS Foundation manages and receives information on its investments in bonds on a fair value basis. Information is provided on that basis to the Trustees and key management
personnel. Bonds are carried at fair value through profit or loss, based on quoted prices in active markets (described as level 1 by IFRS 7). The maturity of the bonds is as
follows:

Nominal value

Nominal value

Fair value

Fair value

2010

2009

2010

2009

£’000

£’000

£’000

£’000

Less than one year

1,191

1,504

1,199

1,528

Total current

1,191

1,504

1,199

1,528

More than one year and less than two years

3,259

1,189

3,385

1,237

More than two years and less than three years

704

3,286

725

3,446

More than three and less than four years

658

706

674

706

More than four and less than five years

-

672

-

666

Total non-current

4,621

5,853

4,784

6,055

Total

5,812

7,357

5,983

7,583

Bonds provide a yield in the range of 0.7% to 1.9% per year.

(c) Trade and other receivables

Credit risk: In addition to its financing programme, the IFRS Foundation supplements its funding through publications and related activities. For publications and
subscriptions sales the IFRS Foundation does not offer credit. For licensing and royalty arrangements some credit risk arises. However, the organisation works largely with major
publishers and accounting bodies, with whom it has long-standing relationships, and therefore the IFRS Foundation does not credit check these customers before it enters into business
with them.

The IFRS Foundation has no significant exposure to large or key customers: its largest customer does not exceed 3 per cent of the IFRS Foundation’s revenues. The maximum
exposure to credit risk is considered to be the trade receivable balance at the year-end; other financial assets in the financial statements, such as contributions receivable, are
generally realised in full.

2010

2009

£‘000

£‘000

Not yet due

895

804

Past due but not impaired

39

106

Total

934

910

Where past due accounts are still unpaid six months or more after invoice date and the IFRS Foundation considers the amount impaired it provides for the amount as a bad debt
provision in the financial statements. At 31 December 2010 the amount provided for was £ 13,000 (2009: £ 20,000).

(d) Currency risk

The IFRS Foundation’s expenses arise largely in sterling, whereas the organisation has received funding and future financing commitments in US dollars and euros. The Trustees have
implemented a strategy to mitigate the foreign exchange fluctuations and timing risks connected with the various funding regimes. The IFRS Foundation generally forward sells
approximately 90 per cent of its net US dollar contributions and 50 per cent of its net euro contributions to fix a
sterling equivalent. Foreign currency is sold forward on a two-year rolling basis.

Details of these forward contracts are set out in the table below.

Forward contracts US dollar

2010

2009

Buy

Sell

Weighted average

Buy

Sell

Weighted average

£’000

$’000

rate

£’000

$’000

rate

2010

-

-

-

7,166

11,791

1.645

2011

7,300

11,790

1.615

4,009

6,550

1.634

2012

7,009

11,150

1.591

-

-

-

Total

14,309

22,940

1.603

11,175

18,341

1.641

Forward contracts euro

2010

2009

Buy

Sell

Weighted average

Buy

Sell

Weighted average

£’000

€’000

rate

£’000

€’000

rate

2010

-

-

-

1,800

2,250

1.250

Total

-

-

-

1,800

2,250

1.250

The ranges of rates for the US dollar are 1.5819 – 1.6348 (2009: 1.4741 – 1.8170).

The following changes to fair value are reported in the Statement of Comprehensive Income.

Income (Charge) in Statement of Comprehensive Income

2010

2009

£’000

£’000

Forward foreign exchange contracts

52

3,047

Bonds

( 56)

( 81)

Changes in fair value of financial instruments

( 4)

2,966

Below are the fair values of these contracts, based on quoted prices in active markets (described as level 1 by IFRS 7), as reported in the Statement of Financial Position.

Fair value

2010

Fair value

2009

Derivatives

£’000

£’000

Forward contracts expiring end of each calendar quarter of 2010

-

( 355)

Forward contracts expiring end of each calendar quarter of 2011

( 241)

( 93)

Forward contracts expiring end of each calendar quarter of 2012

( 154)

-

Total

( 395)

( 448)

(e) Foreign currency sensitivity

The following table shows the sensitivity of the reported results to a potential 10 per cent fluctuation in year-end exchange rates.

Forward sales

£

Weakens 10%

£ Strengthens 10%

‘000

£’000

£’000

US dollar

22,940

Profit and loss effect (before tax)

( 1,634)

1,337

From time to time the IFRS Foundation holds US dollar funds in anticipation of US dollar liabilities. Over the year the US dollar exchange rate reached a high of 1.64 to sterling,
whilst the low point was 1.43 to sterling. The following table shows the sensitivity of the reported results to a potential 10 per cent fluctuation in year-end
exchange rates.

Cash holding

£

Weakens 10%

£ Strengthens 10%

‘000

£’000

£’000

US dollar

737

Profit and loss effect (before tax)

53

( 43)

Euro

100

Profit and loss effect (before tax)

9

( 8)

Total

62

( 51)

11. Taxation

For US tax purposes, the IFRS Foundation is classified as a not-for-profit, tax-exempt organisation.

In 2006 the IFRS Foundation reached an agreement with the UK authorities regarding the status of taxation on its publications and related revenues. For 2010 the taxation expense is
calculated on this basis and is estimated to be £ 13,000 (2009: a credit of £ 60,000). On the basis of activity for 2010
and from previous years, at the end of 2010 the IFRS Foundation is carrying forward a loss for UK tax purposes of £ 1,742,000 (2009: £ 957,000).

Consistent with IAS 12 Income Taxes, the IFRS Foundation does not recognise this loss as a deferred tax asset, because of the uncertainty of being able to utilise these losses
in the future.

12. Movement in net assets

2010

2009

£’000

£’000

Net assets at the beginning of the reporting period

9,731

9,084

Comprehensive income in the year net of tax

( 2,024)

647

Net assets at the end of the reporting period

7,707

9,731

13. Inventories

Inventory of books amount to £ 293,000 (2009: £ 138,000).

14. Approval of financial statements

These financial statements were approved by the Trustees of the IFRS Foundation on 31 March 2011 and
authorised for issue on 31
March 2011, and at that date there were no significant events after the reporting period.

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